convocation notice of the 98th ordinary … · convocation notice of the 98th ordinary general...

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Securities code: 6440

March 1, 2013 To All Shareholders:

Akira Kiyohara President JUKI CORPORATION 2-11-1, Tsurumaki, Tama-shi, Tokyo, Japan

CONVOCATION NOTICE OF THE 98TH ORDINARY GENERAL MEETING OF SHAREHOLDERS

Dear Shareholders:

You are cordially invited to attend the 98th Ordinary General Meeting of Shareholders (the “Meeting”) of

JUKI CORPORATION (the “Company”) to be held as indicated below.

If you are unable to attend the Meeting, you may exercise your voting rights in writing. Please review the attached “Reference Materials for the Ordinary General Meeting of Shareholders, ” indicate “for” or “against” for each of the proposals in the enclosed Voting Right Exercise Form, and return the form to us no later than 6:00 p.m., Tuesday, March 26, 2013 (Japan Standard Time).

Thank you very much for your cooperation.

1. Date and Time: March 27, 2013 (Wednesday) at 10:00 a.m.

2. Place: Multi-purpose hall, 3rd floor of the East Tower of the Company’s Head Office,

2-11-1, Tsurumaki, Tama-shi, Tokyo, Japan

3. Meeting Agenda: Report matters: 1. The Business Report and the Consolidated Financial Statements for the 98th

Fiscal Year (January 1, 2012 to December 31, 2012), and the results of audits of the Consolidated Financial Statements by the Accounting Auditor and the Audit & Supervisory Board

2. Non-consolidated Financial Statements for the 98th Fiscal Year (January 1, 2012 to December 31, 2012)

Resolution matters: First proposal: Partial Amendments to the Articles of Incorporation Second proposal: Election of 6 Directors Third proposal: Election of 2 Substitute Audit & Supervisory Board Members ----------------------------------------------------------------------------------------------------------------------------- - If you plan to attend the Meeting, please submit the enclosed Voting Right Exercise Form to the

receptionist at the Meeting. - Any amendments to the Reference Materials for the Ordinary General Meeting of Shareholders, Business

Report, Non-consolidated Financial Statements, and Consolidated Financial Statements will be posted on the Company’s website (URL: http://www.juki.co.jp).

These documents have been translated from Japanese originals for reference purposes only. In the event of any discrepancy between these translated documents and the Japanese originals, the originals shall prevail. JUKI CORPORATION assumes no responsibility for these translations or for direct, indirect or any other forms of damages arising from the translations.

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(Attached materials)

Business Report (January 1, 2012 to December 31, 2012)

1. Overview of the JUKI Group (the “Group”) (1) Business Progress and Results

In the fiscal year 2012 (“FY 2012”), there was a global economic downturn mainly reflecting the protracted financial crisis in Europe and a slowdown in growth in emerging markets including China, as well as sluggishness in capital investment demand from sewing factories and electronics factories. Furthermore, the business environment surrounding the Company remained harsh, mainly because of the long-standing, substantial appreciation of the yen, which trended at around 80 yen to the dollar despite showing signs of depreciation at the fiscal year-end, and the marked increase in business risk for Japanese companies which have China as their main market. As a result, consolidated net sales for FY 2012 were 75,831 million yen, with a consolidated ordinary loss of 2,996 million yen. In light of operating results for FY 2012, the Company reversed 5,191 million yen of deferred tax assets. This resulted in a consolidated net loss of 8,342 million yen.

Owing to the change in the balance sheet date, the fiscal year ended December 31, 2011 is a nine-month period. Accordingly, year-on-year changes are not provided.

Business results by major segment are as follows: For net sales by segment, which are presented below, year-on-year comparisons with the same period

of the previous calendar year (sum of the results for the fourth quarter of the fiscal year ended March 31, 2011 and the fiscal year ended December 31, 2011, which was the period between January 1, 2011 and December 31, 2011) are provided for reference purposes. 1) Sewing Machinery Business

In China, exports of clothing to Europe and North America declined, while capital investment demand stagnated mainly due to relocation of clothing production bases to Southeast Asian regions. On the other hand, an increase in sales to manufacturers of non-apparel sewn products such as car seats and sports shoes, as well as new product launches, helped to partially offset these effects. Even so, the slump in the market had a considerable impact, and consolidated net sales of the Sewing Machinery Business as a whole were 52,424 million yen (down by 11.5% from the same period of the previous calendar year). 2) Electronic Assembly Systems Business (SMT systems, etc.)

In China, which is the largest market for this business, the impact of capital investment restraint was increasingly pronounced. Sales also fell substantially in Europe and North America, primarily because of economic slowdown. With intensified competition from overseas companies also contributing to an overall decline, consolidated net sales of the Electronic Assembly Systems Business as a whole were 16,480 million yen (down by 24.6% from the same period of the previous calendar year).

(2) Capital Investments

Capital investment totaling 1,149 million yen was disbursed in FY 2012, including 488 million yen for machinery, equipment and vehicles and 498 million yen for tools, furniture and fixtures.

(3) Financing

Financing for FY 2012 was arranged using the Group’s own funds and borrowings from financial institutions.

(4) Issues to Address

In order for the Company to achieve sustainable growth in the current difficult business environment amid stagnation in capital investment demand mainly due to the global economic downturn, strengthening earnings power and the financial structure is an important management issue. Specifically, it is important to steadily build up earnings by turning a profit in all businesses and to improve cash flows by reducing inventories and other means. For these reasons, the Company has formulated the

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“JUKI structural reform plan,” under which it is implementing two structural reforms: “structural value chain reform” and “structural business operation reform.”

1) In the “structural value chain reform,” fixed costs and variable expenses will be reduced in all aspects

without exceptions, putting in place a structure in which profitability can be secured even if net sales are level with FY 2012 by lowering the level of net sales needed to reach the profitability breakeven point.

・Reduction in fixed sales costs ・Reduction in manufacturing costs (total cost reduction) ・Streamlining of development ・Streamlining of administrative and indirect functions As a personnel strategy in light of these measures, applicants for voluntary retirement will be

solicited from among employees of the Company and some group companies in Japan. Furthermore, salary adjustments will be examined and personnel systems will be reviewed.

Cash flows will be improved by thoroughly managing inventories at sales bases, as well as reducing inventories by reflecting sales information at each individual base in production at factories in a timely manner.

2) In the “structural business operation reform,” investment of business resources will be concentrated

on growing markets and fields of strength through selection and concentration in the market strategy, reconstructing strong business foundation.

(i) Sewing Machinery Business: Expansion of focus markets and business areas

The focus market will be shifted to emerging countries in regions such as Southeast Asia and South Asia. In addition, non-apparel and knitwear, etc., will be strengthened as focus business fields for business field expansion. In particular, in the knitwear field, development will be centered on alliances in each of the fields of sales, development and production. In the woven field, meanwhile, efforts will be focused on sales of automated machines with a competitive edge and development of customization products.

(ii) Electronic Assembly Systems Business: Focus on fields of strength Business resources will be concentrated on sales and development in areas including the general-purpose line, a field of strength. In addition, our global sales structure will be strengthened with a focus on growing multinational companies and initiatives aimed at manpower-saving and labor-saving markets will be taken. These measures will strengthen our competitive edge. Furthermore, business expansion initiatives will be undertaken with the use of alliances in the areas of sales and service networks and development.

We will address these issues through the concerted efforts of the Group, in order to meet the

expectations from our shareholders. We, kindly, ask our shareholders for their further support and encouragement.

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(5) Changes in Assets and Income (Loss)

1) Group (million yen, except for per share amounts)

Item The 95th fiscal

year ended March 31, 2010

The 96th fiscal year ended

March 31, 2011


December 31, 2011


December 31, 2012Net sales 56,970 89,596 65,326 75,831Ordinary income (loss) (11,102) 1,174 1,374 (2,996)Net income (loss) (11,233) 2,467 726 (8,342)Net income (loss) per share ¥(86.93) ¥19.09 ¥5.62 ¥(64.56)Total assets 101,081 106,593 114,263 110,341Net assets 10,686 11,549 12,361 4,934Net assets per share ¥80.66 ¥87.45 ¥93.65 ¥35.91

(Notes) 1. Net income (loss) per share is calculated using the average number of shares issued during the fiscal year (excluding treasury shares). Net assets per share is calculated using the number of shares issued as of the end of the fiscal year (excluding treasury shares).

2. The 97th fiscal year (the previous fiscal year) is the nine-month period from April 1, 2011 to December 31, 2011 because of a change in the balance sheet date.

2) Company

(million yen, except for per share amounts)

Item The 95th fiscal

year ended March 31, 2010


March 31, 2011


December 31, 2011


December 31, 2012Net sales 27,725 60,101 44,015 49,009Ordinary income (loss) (10,655) 2,461 2,207 (1,702)Net income (loss) (9,975) 1,684 1,711 (7,234)Net income (loss) per share ¥(77.19) ¥13.03 ¥13.24 ¥(55.99)Total assets 83,591 87,048 94,838 90,388Net assets 15,545 17,262 18,556 11,074Net assets per share ¥120.29 ¥133.59 ¥143.61 ¥85.71

(Notes) 1. Net income (loss) per share is calculated using the average number of shares issued during the fiscal year (excluding treasury shares). Net assets per share is calculated using the number of shares issued as of the end of the fiscal year (excluding treasury shares).

2. The 97th fiscal year (the previous fiscal year) is the nine-month period from April 1, 2011 to December 31, 2011 because of a change in the balance sheet date.

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(6) Principal Subsidiaries

Capital The Company’s percentage of voting rights Company name

(million yen) Direct Indirect

Main business

JUKI MATSUE CORPORATION 400 100% ― Manufacture and sales of industrial

sewing machines and parts JUKI DENSHI KOGYO CORPORATION

300 100% ― Manufacture and sales of SMT systems, etc.

JUKI AIZU CORPORATION 229 100% ― Manufacture and sales of precision casting products, etc.

JUKI SALES (JAPAN) CORPORATION 86 100% ― Sales of sewing machinery in Japan

JUKI (HONG KONG) LTD. HK$148,655 thousand 100% ― Sales of sewing machinery in China and East Asian regions

JUKI CENTRAL EUROPE SP.ZO.O. PLN50 thousand 100% ― Sales of sewing machinery in

European regions

JUKI AMERICA, INC. U.S.$26,346 thousand 100% ― Sales of sewing machinery in the Americas

JUKI (CHINA) CO., LTD. RMB358,365 thousand 100% ― Administration of subsidiaries in China and sales of sewing machinery

JUKI SINGAPORE PTE. LTD. U.S.$8,079 thousand 100% ― Sales of sewing machinery in Asian regions

JUKI XINXING INDUSTRY CO., LTD. RMB160,000 thousand ― 89.9% Manufacture and sales of industrial

sewing machines JUKI (SHANGHAI) INDUSTRIAL CO., LTD. RMB196,148 thousand 27.5% 72.5% Manufacture and sales of industrial

sewing machines TOKYO JUKI INTERNATIONAL TRADE (SHANGHAI) CO., LTD.

RMB5,001 thousand 100% ― Sales of SMT systems, etc. in China

(7) Principal Business

Segment Summary of business

Sewing Machinery Business Manufacture and sales of industrial sewing machines and household sewing machines

Electronic Assembly Systems Business Manufacture and sales of SMT systems, etc. (8) Principal Offices and Plants

Company name Office or plant Location Head Office Tokyo

JUKI CORPORATION Ohtawara Plant Tochigi

JUKI DENSHI KOGYO CORPORATION Head Office and Plant Akita JUKI MATSUE CORPORATION Head Office and Plant Shimane JUKI (SHANGHAI) INDUSTRIAL CO., LTD. Head Office and Plant Shanghai, China JUKI XINXING INDUSTRY CO., LTD. Head Office and Plant Hebei, China JUKI (CHINA) CO., LTD. Head Office Shanghai, China JUKI (HONG KONG) LTD. Head Office Hong Kong JUKI SINGAPORE PTE. LTD. Head Office Singapore TOKYO JUKI INTERNATIONAL TRADE (SHANGHAI) CO., LTD. Head Office Shanghai, China

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(9) Employees

1) Group (As of December 31, 2012)

Segment Number of employees Change from previous fiscal year-end

Sewing Machinery Business 4,204 (125) Electronic Assembly Systems Business 1,017 (114) Other business 1,039 56 Corporate headquarters (common) 238 (4) Total 6,498 (187)

(Note) The above figures include contract employees and part-timers and exclude dispatched employees.

2) Company (As of December 31, 2012)

Number of employees Change from previous fiscal year-end Average age Average years of service

1,210 No change 43.0 years old 18.4 years(Note) The above figures include contract employees and part-timers and exclude dispatched employees.

(10) Major Creditors and Balance of Borrowings

(As of December 31, 2012)

Creditor Balance of borrowings (million yen)

Mizuho Bank, Ltd. 22,563

Sumitomo Mitsui Trust Bank, Limited 12,074

Mizuho Trust & Banking Co., Ltd. 7,676

Mizuho Corporate Bank, Ltd. 6,966

The Hiroshima Bank, Ltd. 5,240

The Joyo Bank, Ltd. 2,725

2. Status of Shares (As of December 31, 2012)

(1) Total Number of Authorized Shares 400,000,000 shares (2) Total Number of Issued Shares 129,370,899 shares (including 154,570 treasury shares) (3) Number of Shareholders 15,603 persons

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(4) Major Shareholders (Top 10)

Shareholder name Number of shares Shareholding ratio thousand shares %

Mizuho Bank, Ltd. 4,690 3.62

Nippon Life Insurance Company 4,306 3.33

Asahi Mutual Life Insurance Company 3,556 2.75

The Dai-ichi Life Insurance Company, Limited 2,558 1.97

Meiji Yasuda Life Insurance Company 2,300 1.77

Mizuho Trust & Banking Co., Ltd. 2,005 1.55

JUKI Employee Share Holdings 1,741 1.34

CREDIT SUISSE INTERNATIONAL 1,693 1.31

Aioi Nissay Dowa Insurance Co., Ltd. 1,280 0.99

Sompo Japan Insurance Inc. 1,280 0.99

(Note) The shareholding ratio is calculated by means of deducting treasury shares (154,570 shares) from the number of the issued shares.

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3. Company Officers (1) Directors and Audit & Supervisory Board Members


Position Name Areas of responsibility within the Company Significant concurrent positions

Chairman Kazuyuki Nakamura Representative Director

President Akira Kiyohara Representative Director

Senior Managing Director Shinji Yamaguchi “In charge of Business Operation Center (Sewing Machinery Business Unit)” and Executive Unit Officer of Sewing Machinery Business Unit

Managing Director Hirokazu Nagashima “In charge of Business Operation Center (Electronic Assembly Systems Business Unit),” “In charge of Quality Assurance Dept.,” and Executive Unit Officer of Electronic Assembly Systems Business Unit

Managing Director Shuji Yamaoka “In charge of Production Center” Managing Director Takashi Mizuno “In charge of Development

Center”

Director Toshihiko Ozaki Director and Senior Managing Officer of TPR Co., Ltd. and Director of TPR Trading Co., Ltd.

Audit & Supervisory Board Member (Full-time)

Yoshihiro Otake

Audit & Supervisory Board Member

Kousuke Inoue

Audit & Supervisory Board Member

Masato Tanaka Attorney

(Notes) 1. Director, Mr. Takashi Mizuno, was newly elected and assumed his position at the 97th Ordinary General Meeting of Shareholders held on March 28, 2012.

2. Director, Mr. Toshihiko Ozaki, is an Outside Director as defined in Item 15 of Article 2 of the Companies Act.

3. Director, Mr. Toshihiko Ozaki, is such independent director as specified by the Tokyo Stock Exchange. 4. Audit & Supervisory Board Members, Mr. Kousuke Inoue and Mr. Masato Tanaka, are Outside Audit

& Supervisory Board Members as defined in Item 16 of Article 2 of the Companies Act. 5. Audit & Supervisory Board Member, Mr. Yoshihiro Otake, has many years of accounting experience

and has sufficient financial and accounting knowledge. 6. Audit & Supervisory Board Member, Mr. Kousuke Inoue, has been engaged in corporate management

for many years and has sufficient financial and accounting knowledge.

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(2) Amount of Remuneration to Directors and Audit & Supervisory Board Members for FY 2012, etc.

Title Number of payees Amount of remuneration (million yen)

Director 8 216

Audit & Supervisory Board Member 3 22

Total 11 239

(Notes) 1. The above number of payees and amount of remuneration include one Director who retired during FY 2012.

2. No bonuses for Directors and Audit & Supervisory Board Members have been paid and are payable. (3) Outside Officers

1) Significant concurrent positions Significant concurrent positions held by outside officers are as described on page 8. There are no

specific transactions between the Company and the organizations where concurrent positions are held.

2) Main activities Title Name Main activities

Director Toshihiko Ozaki Participated in all 12 Board of Directors’ meetings held in FY 2012, and provided expert opinions, mainly as an experienced corporate manager, as necessary.

Kousuke Inoue

Participated in 11 out of 12 Board of Directors’ meetings and in all 9 Audit & Supervisory Board meetings held in FY 2012; provided expert opinions, mainly as an experienced corporate manager, as necessary. Audit & Supervisory

Board Members

Masato Tanaka Participated in all 12 Board of Directors’ meetings and in all 9 Audit & Supervisory Board meetings held in FY 2012; provided expert opinions, mainly as an experienced attorney, as necessary.

3) Summary of contract for limitation of liability

The Company has concluded contracts for limitation of liability with Outside Director, Mr. Toshihiko Ozaki, and Outside Audit & Supervisory Board Members, Mr. Kousuke Inoue and Mr. Masato Tanaka, to limit their liability as stipulated in Paragraph 1 of Article 423 of the Companies Act up to the total sum stipulated in Paragraph 1 of Article 425 of the Companies Act. 4) Total amount of remuneration to outside officers for FY 2012, etc.

Number of payees Amount of remuneration (million yen)

Total amount of remuneration 3 15

(Note) No bonuses for Director and Audit & Supervisory Board Members have been paid and are payable.

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(For reference) <Executive Operating Officers>

The Company has introduced the executive operating officer system. In addition to the Executive Operating Officer positions concurrently assumed by all of the Directors (excluding an Outside Director), the following persons have been appointed as full-time Executive Operating Officers:



Senior Executive Operating Officer Hiroshi Nakamura

“In charge of Administration Center (General Affairs Dept.),” “In charge of Business Development Center,” “In charge of Secretariat,” “In charge of Internal Auditing Dept.,” General Manager of General Affairs Dept., and “In charge of Internal Control and Compliance”

Senior Executive Operating Officer Shinsuke Uchinashi

“In charge of Administration Center (Corporate Administration Dept. and Finance & Accounting Dept.)”

Senior Executive Operating Officer Minoru Wada “In deputy charge of Production

Center”

Executive Operating Officer Harunobu Ono President of JUKI AMERICA, INC.

Executive Operating Officer Kimio Honma President of JUKI SALES (JAPAN)

CORPORATION Executive Operating Officer Kiyotaka Kawano General Manager of Corporate

Administration Dept.

Executive Operating Officer Toshimasa Miura General Manager of Human

Resources Dept.

Executive Operating Officer Toshinobu Shinozuka “In deputy charge of Development

Center”

Executive Operating Officer Satohiro Hama

Deputy Executive Unit Officer of Electronic Assembly Systems Business Unit and “In charge of China & Southeast Asia Areas”

Director and General Manager of TOKYO JUKI INTERNATIONAL TRADE (SHANGHAI) CO., LTD.

Executive Operating Officer Naotake Miyashita

Deputy Executive Unit Officer of Sewing Machinery Business Unit (In charge of China & Southeast Asia Areas), “In charge of Global Sales Section, Sewing Machinery Business Unit,” and General Manager of Knitwear Machinery Sales Dept., Sewing Machinery Business Unit

Executive Operating Officer Hirofumi Gotoh Chairman and General Manager of

JUKI (CHINA) CO., LTD.

Executive Operating Officer Robert J. Black Jr.

“In charge of Europe & Americas Area, Electronic Assembly Systems Business Unit”

President and CEO of JUKI AUTOMATION SYSTEMS INC.

Executive Operating Officer Katsumi Nihei

Deputy Executive Unit Officer of Sewing Machinery Business Unit (In charge of Japan, South Asia, Europe, Americas & Middle East Areas), “In charge of Parts Business Section, Sewing Machinery Business Unit,” and Company President of Non-apparel Company, Sewing Machinery Business Unit

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(Note) The followings are the areas of responsibility and significant concurrent positions for Executive Operating Officers, after the organizational revision on January 1, 2013:


Executive Operating Officer Satohiro Hama

Deputy Executive Unit Officer of Electronic Assembly Systems Business Unit

4. Accounting Auditor (1) Accounting Auditor’s Name

Deloitte Touche Tohmatsu LLC (2) Accounting Auditor’s Compensation, etc.

1) Compensation to Accounting Auditor as provided in Paragraph 1 of Article 2 of the Certified Public Accountants Act of Japan 65 million yen

2) Total amount of cash and other property benefits payable by the

Company and its subsidiaries to Accounting Auditor 65 million yen

(Notes) 1. The audit contract between the Company and Accounting Auditor does not clearly distinguish between

compensation, etc. paid for the audit conducted in accordance with the Companies Act and compensation, etc. paid for the audit conducted in accordance with Financial Instruments and Exchange Act. It is practically impossible to make such a distinction. Accordingly, the amount specified in 1) above is the aggregate amount of compensation, etc. for these two types of audits.

2. Among the principal subsidiaries, JUKI (HONG KONG) LTD., JUKI CENTRAL EUROPE SP.ZO.O., JUKI (CHINA) CO., LTD., JUKI SINGAPORE PTE. LTD., JUKI XINXING INDUSTRY CO., LTD., JUKI (SHANGHAI) INDUSTRIAL CO., LTD., and TOKYO JUKI INTERNATIONAL TRADE (SHANGHAI) CO., LTD. are audited by certified public accountants or audit corporations other than the Company’s Accounting Auditor.

(3) Non-audit Operation

No items to report. (4) Policy Regarding Determination of Termination or Nonrenewal of Appointment of Accounting

Auditors

The Company has not established a policy regarding the determination of termination or nonrenewal of the appointment of Accounting Auditors.

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5. Systems to ensure that Directors execute their duties in compliance with relevant laws and regulations and the Articles of Incorporation of the Company, and that business is conducted properly

The Company adopted a resolution on the “Basic policy to construct internal control system” at the

Board of Directors’ meeting held on May 17, 2006. The details of the resolution, which have been revised by later resolutions based on reviews as needed, are at present as follows:

(1) System to ensure that Directors execute their duties in compliance with relevant laws and

regulations and the Articles of Incorporation of the Company

1) The Company shall establish the “JUKI Corporation Code of Conduct,” which shall provide the principles of the JUKI corporate philosophy as a legal entity, in order to make clear its positive attitude towards legal compliance.

2) The Company shall establish the “Code of Conduct for Officers and Employees,” a set of specific

guidelines for the execution of duties, in order to make officers and employees proactively acknowledge the importance of compliance with laws and regulations.

3) The group-wide system for compliance and compliance management shall be provided in the

“Compliance Rules.” 4) The Company shall take a resolute attitude toward any antisocial individuals and organizations who

adversely influence social order and sound corporate activities. (2) System to store and control information related to Directors’ execution of duties

1) The Company shall establish the “Rules for Retaining Important Documents,” and shall retain and control information related to the execution of duties by Directors in accordance with the said Rules.

(3) Rules and other systems for managing risk of loss

1) The Company shall establish the “Risk Management Rules” to manage group-wide risks. 2) The Company shall establish the “Risk Management Committee” to examine significant risks the

Company faces and prepare preventive measures against such risks, and shall manage each division’s and each department’s preventive measures activities against risks.

3) The “Crisis-Management Task Force” shall take prompt actions against any realized risks.

(4) System to ensure that Directors execute their duties efficiently

1) In order to enable Directors to facilitate the prompt execution of their duties, the Company shall adopt an Executive Operating Officer system under which the Executive Operating Officers may be given some of the authority required for executing Directors’ duties.

2) Employees may be given some of the authority required for executing Directors’ duties in accordance

with the “Authorization Rules,” for the purpose of efficient decision making. 3) Important decision-making matters shall be discussed at the “Management Strategy Council” and

shall be decided by the President after such discussion. 4) Rules for executing Directors’ duties shall be provided in the “Organization Rules,” and Directors

shall make efforts to efficiently execute their duties in accordance with the said Rules. (5) System to ensure that employees execute their duties in compliance with relevant laws and

regulations and the Articles of Incorporation of the Company

1) The Company shall establish the “JUKI Corporation Code of Conduct,” which shall provide the principles of the JUKI corporate philosophy as a legal entity, in order to make clear its positive attitude towards legal compliance.

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2) The Company shall establish the “Code of Conduct for Officers and Employees,” a set of specific guidelines for the execution of duties, in order to make employees proactively acknowledge the importance of compliance with laws and regulations.

3) The department in charge of handling legal affairs shall conduct activities to spread compliance

education and compliance management for enhanced legal compliance. 4) The position of Executive Operating Officer in charge of Internal Control & Compliance shall be

established, and this Officer shall be responsible for legal compliance and shall bear the duties of supervision of relevant organizations and their activities.


“Compliance Rules.” 6) The Company shall establish a “Compliance Helpline” available for direct access by employees, for

the purpose of making such Helpline available to respond to questions related to compliance raised by employees.

(6) System to ensure the propriety of the business operations of the business group consisting of the

Company and its group companies

1) The Company’s “Risk Management System” and “Compliance System” shall cover the whole group, including all group companies.

2) The position of Executive Operating Officer in charge of Internal Control & Compliance shall be

established, and this Officer shall be responsible for group-wide legal compliance and shall bear the duties of supervision of relevant activities.


“Compliance Rules.” 4) The Company shall determine the management control system according to functional organization in

its “Organization Rules” and “Group companies management rules.” 5) The Company shall check and adjust the management policies and management plans of the group

companies at its “Group Management Conference.” 6) Decision making on the allocation of management resources in group companies shall be provided in

the “Authorization Rules.” 7) The Company’s Internal Auditing Department shall conduct internal audits, as needed, on group

companies. (7) Employees to be assigned at the request of Audit & Supervisory Board Members for their

assistance

1) The “Audit & Supervisory Board Members Section” directly reporting to the Audit & Supervisory Board Members shall be established as an organization to assist the Audit & Supervisory Board Members.

(8) Independence from Directors of such employees as specified in the preceding item (7)

1) Employees belonging to the “Audit & Supervisory Board Members Section” shall follow the directions and instructions of the Audit & Supervisory Board Members and collect information necessary for the Audit & Supervisory Board Members’ audit.

2) The Audit & Supervisory Board Members may express opinions on the personnel transfer and

performance evaluation of the employees belonging to the “Audit & Supervisory Board Members Section.”

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(9) System for Directors and employees to report to Audit & Supervisory Board Members, and other relevant systems

1) Full-time Audit & Supervisory Board Members shall attend the Board of Directors’ meetings,

Management Strategy Council, Group Management Conference, Risk Management Committee, and other important meetings, and collect necessary information by themselves.

2) Directors shall promptly report to the Audit & Supervisory Board Members on any event likely to

cause significant damage to the Company, any sign of fraudulence in the Directors’ execution of duties, any serious event in violation of laws and regulations or the Articles of Incorporation, and other events equivalent thereto.

3) Audit & Supervisory Board Members shall request the relevant departments to directly report to them

on any information the Audit & Supervisory Board Members deem to be necessary. (10) Other systems to ensure that the Audit & Supervisory Board Members conduct audits effectively

1) In addition to expressing their opinions at the Board of Directors’ meetings, the Audit & Supervisory Board Members shall exchange opinions with Representative Directors as needed in order to enhance the effectiveness of the Audit & Supervisory Board Members’ audits.

2) Audit & Supervisory Board Members shall conduct the Audit & Supervisory Board Members’ audit

in cooperation with the Internal Auditing Department, as needed. 3) Audit & Supervisory Board Members shall conduct the Audit & Supervisory Board Members’ audit

in cooperation with corporate attorneys and certified public accountants, as needed. (11) System to ensure the reliability of financial reporting

1) The Company shall develop and manage systems for effective internal control over financial

reporting, in order to ensure reliable financial reporting.

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Consolidated Financial Statements (January 1, 2012 - December 31, 2012)

Consolidated Balance Sheet


(million yen) Description Amount Description Amount

(Assets) (Liabilities) Current assets 75,641 Current liabilities 72,490

Cash and deposits 8,066 Notes and accounts payable-trade 10,112 Notes and accounts receivable-trade 21,193 Short-term loans payable 53,981 Merchandise and finished goods 33,525 Current portion of bonds 40 Work in process 3,929 Lease obligations 361 Raw materials and supplies 6,137 Accounts payable-other 2,198 Deferred tax assets 671 Accrued expenses 2,616 Other 3,571 Income taxes payable 241 Allowance for doubtful accounts (1,452) Provision for bonuses 25

Noncurrent assets 34,700 Notes payable-facilities 31 Property, plant and equipment 28,471 Forward exchange contracts 2,124

Buildings and structures, net 15,970 Other 757 Machinery, equipment and vehicles,

net 2,860 Noncurrent liabilities 32,917

Tools, furniture and fixtures, net 1,373 Bonds payable 10 Land 7,411 Long-term loans payable 25,167 Lease assets, net 801 Lease obligations 612 Construction in progress 53 Provision for retirement benefits 6,571

Intangible assets 1,492 Provision for directors’ retirement benefits 157

Investments and other assets 4,736 Other 398 Investment securities 2,255 Total liabilities 105,407 Long-term loans receivable 498 (Net assets) Long-term prepaid expenses 199 Shareholders’ equity 10,580 Deferred tax assets 1,206 Capital stock 15,950 Other 1,127 Retained earnings (5,310) Allowance for doubtful accounts (550) Treasury stock (59)

Accumulated other comprehensive income (5,939)

Valuation difference on available-for-sale securities 220

Deferred gains or losses on hedges (136)

Foreign currency translation adjustment (6,024)

Minority interests 293 Total net assets 4,934

Total assets 110,341 Total liabilities and net assets 110,341 (Note) Figures less than one million yen are rounded down to the nearest million.

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Consolidated Statement of Income (January 1, 2012 - December 31, 2012)

(million yen)

Description Amount

Net sales 75,831

Cost of sales 56,868

Gross profit 18,963

Selling, general and administrative expenses 20,414

Operating loss 1,451

Non-operating income

Interest income 105

Dividends income 166

Commission fee 139

Other 568 979

Non-operating expenses

Interest expenses 1,605

Foreign exchange losses 707

Other 211 2,524

Ordinary loss 2,996

Extraordinary income

Gain on sales of noncurrent assets 447 447

Extraordinary loss

Loss on sales and retirement of noncurrent assets 33

Loss on valuation of investment securities 12

Loss on valuation of golf club membership 15

Other 2 62

Loss before income taxes and minority interests 2,611

Income taxes-current 386

Income taxes-deferred 5,335 5,721

Loss before minority interests 8,333

Minority interests in income 9

Net loss 8,342 (Note) Figures less than one million yen are rounded down to the nearest million.

17

Consolidated Statement of Changes in Net Assets (January 1, 2012 - December 31, 2012)

(million yen) Shareholders’ equity

Capital stock Retained earnings Treasury stock Total shareholders’

equity Balance at the beginning of current period 15,950 3,646 (58) 19,538

Changes of items during the period

Change of scope of consolidation (226) (226)

Dividends from surplus (387) (387)

Net loss (8,342) (8,342)

Purchase of treasury stock (0) (0)

Net changes of items other than shareholders’ equity –

Total changes of items during the period – (8,957) (0) (8,957)

Balance at the end of current period 15,950 (5,310) (59) 10,580

(million yen)

Accumulated other comprehensive income

Valuation difference on available-for-sale securities

Deferred gains or losses on

hedges

Foreign currency

translation adjustment

Total accumulated

other comprehensive

income

Minority interests

Total net assets

Balance at the beginning of current period 20 (78) (7,378) (7,436) 260 12,361


Change of scope of consolidation (226)

Dividends from surplus (387)

Net loss (8,342)

Purchase of treasury stock (0)

Net changes of items other than shareholders’ equity 200 (58) 1,354 1,496 33 1,530

Total changes of items during the period 200 (58) 1,354 1,496 33 (7,427)

Balance at the end of current period 220 (136) (6,024) (5,939) 293 4,934(Note) Figures less than one million yen are rounded down to the nearest million.

18

Notes to Consolidated Financial Statements 1. Notes on the Basis for the Preparation of Consolidated Financial Statements, etc. (1) Scope of consolidation

1) Number of consolidated subsidiaries: 31 Names of principal consolidated subsidiaries: JUKI SINGAPORE PTE. LTD., JUKI (HONG KONG) LTD., JUKI DENSHI KOGYO CORPORATION, JUKI AMERICA, INC., and 27 other subsidiaries. JUKI INDIA PVT. LTD. is included in the scope of consolidation because the materiality of the company has increased. JUKI HOUSEHOLD SEWING MACHINE CORPORATION and JUKI SEIMITSU CORPORATION, former consolidated subsidiaries which went into liquidation, are excluded from the scope of consolidation.

2) Names of major non-consolidated subsidiaries:

Six non-consolidated subsidiaries, including SHOWA JUKI CO., LTD, are excluded from the scope of consolidation because their exclusion does not preclude reasonable judgment on the Group’s financial situation and management results as a whole.

(2) Application of equity-method

The six non-consolidated subsidiaries and NISSEN Co., Ltd. and four other affiliates are excluded from application of equity-method because their exclusion does not preclude reasonable judgment on the Group’s financial situation and management results as a whole.

(3) Accounting periods of consolidated subsidiaries

The year-end balance sheet dates for all consolidated subsidiaries, other than JUKI INDIA PVT. LTD. whose balance sheet date is March 31, are the same as the consolidated balance sheet date. The financial statements of JUKI INDIA PVT. LTD. prepared on the basis of a provisional closing of accounts as of the consolidated balance sheet date are used in preparing the consolidated financial statements.

(4) Accounting standards

1) Standards and methods for valuation of important assets A. Securities

Available-for-sale securities with market quotations Stated based on the market price, etc. on the consolidated balance sheet date (Unrealized gains and losses are excluded from income and reported in a separate component of net assets. The cost of sales is calculated using the moving-average method.)

Available-for-sale securities without market quotations

Stated at cost using the moving-average method

B. Derivatives Stated mainly at market

C. Inventories

Stated at the lower of cost Merchandise and finished goods and work in process

Mainly by the average method or first-in first-out method

Raw materials and supplies Mainly by the average method or last cost method

19

2) Depreciation & amortization method for important depreciable assets A. Property, plant and equipment (excluding lease assets)

The declining-balance method is applied for the Company and its domestic consolidated subsidiaries. However, the straight-line method is applied for buildings acquired on and after April 1, 1998 (excluding any building fixtures). Overseas consolidated subsidiaries are mainly subject to the straight-line method. The main economic useful lives are as follows:

Buildings and structures 3 - 50 yearsMachinery, equipment and vehicles 2 - 15 yearsTools, furniture and fixtures 2 - 20 years

B. Intangible assets (excluding lease assets) and long-term prepaid expenses

The Company and its domestic consolidated subsidiaries use the straight-line method. However, software bundled with computer hardware is amortized every fiscal year by no less than an equal amount calculated based on effective years (3 - 5 years), and computer software for internal use is amortized by the straight-line method over the estimated useful life (5 years). Overseas consolidated subsidiaries are subject to the straight-line method.

C. Lease assets

Lease assets pertaining to finance leases without ownership transfer of the lease assets to the lessee The straight-line method is applied on the assumptions that the useful life equals the lease term and the residual value equals zero; provided, however, that lease assets whose leasing started on or before March 31, 2008 are accounted for by the accounting method used for ordinary lease transactions.

3) Standards for recognition of important reserves

A. Allowance for doubtful accounts For loss caused by uncollectible debt to the Company and its domestic consolidated subsidiaries, an allowance for doubtful accounts is provided based on the historical write-off rate for ordinary receivables and the estimated amount of irrecoverable debt based on the recoverability of individual cases for specified receivables such as debt with a possibility of default. For overseas consolidated subsidiaries, the estimated write-off amount is provided.

B. Provision for bonuses

A provision for bonuses is provided based on the estimated future payment of bonuses to employees.

C. Provision for retirement benefits The Company and its major domestic consolidated subsidiaries provide a provision for employees’ retirement benefits based on the estimated retirement benefit obligation and pension plan assets as of this fiscal year-end. Some overseas consolidated subsidiaries provide such provision mainly based on the estimated retirement benefit obligation as of this fiscal year-end. Actuarial calculation differences are amortized on a straight-line basis over a period equal to or less than the average remaining service period for employees at the time such gains or losses are realized (10 years). The amortization of net gains or losses starts from the fiscal year immediately following the year in which such gains or losses are realized. Prior service cost is amortized wholly in the fiscal year in which it is realized.

D. Provision for directors’ retirement benefits The system of directors’ retirement benefits was abolished with a cut-off date of June 28, 2007. The estimated amount payable as of the cut-off date is provided. The ten consolidated subsidiaries provide the provision in an amount that would be required by the internal rule if all the eligible Directors retired at the balance sheet date.

20

4) Standards for translation of important assets or liabilities in foreign currencies into yen Monetary assets and liabilities in foreign currencies are translated into yen based on the spot exchange-rate in the foreign exchange market on the consolidated balance sheet date, and the foreign exchange gains and losses from the translations are recognized in the income statement. Assets and liabilities of overseas consolidated subsidiaries are translated into yen based on the spot exchange-rate in the foreign exchange market on the consolidated balance sheet date, while revenue and expenses are translated into yen based on the average exchange rate for the fiscal term. The differences resulting from these translations are included in “Foreign currency translation adjustment” and “Minority interests” under net assets.

5) Accounting for important hedging activities

A. Method Deferred hedge accounting is applied. Designation is applied to forward exchange contracts that qualify for designation, and designated exceptional accounting is applied to interest-rate swaps that qualify for exceptional accounting.

B. Means for hedging and hedged item Means for hedging Hedged item Interest-rate swap Long-term loans payable Forward exchange contract Foreign currency receivables (including forecast transactions)

C. Hedging policy

Based on internal rules, hedging is limited to transactions (including forecast transactions) in the scope of practical purposes under the management of the Company’s department in charge of finance, and is undertaken to avoid future risks from fluctuations in interest rates and foreign exchange rates.

D. Method for assessing the effectiveness of hedges

At the start of hedging, the Company assesses the effectiveness of offset in interest rate or foreign exchange rate fluctuation. Then, during the period of hedging, the Company uses the predetermined assessment method to assess whether the high effectiveness of offset is maintained at every fiscal year-end. For forward exchange contracts, assessment of the effectiveness of hedges is omitted as important terms regarding hedged items and means for hedging are the same, and changes in the cash flow from foreign exchange rate fluctuations are expected to be completely offset. Assessment of the effectiveness of interest-rate swaps subject to designated exceptional accounting is also omitted.

(Additional information) Treatment of forward exchange contracts on forecasted foreign currency-denominated transactions Primarily because of recent substantial fluctuations in foreign exchange rates, the Company changed its internal regulations and carried out forward exchange contracts on forecasted foreign currency-denominated transactions. Consequently, the Company is applying hedge accounting to some of these contracts and carrying out deferred hedge accounting from the current fiscal year. As a result, 70 million yen of valuation difference on forward exchange contracts has been recorded in deferred gains or losses on hedges (debit).

6) Accounting for consumption taxes

The tax-exclusion method is applied for consumption tax and local consumption tax.

7) Amortization of goodwill Goodwill is amortized equally over a period of 5 years.

(5) Change of presentation method

1) “Accounts payable-other” (1,134 million yen for the previous fiscal year), an item included in “Other” under “Current liabilities” in the previous fiscal year, has become material and is therefore presented separately from the current fiscal year.

2) “Commission fee” (115 million yen for the previous fiscal year), an item included in “Other” under

“Non-operating income” in the previous fiscal year, has become material and is therefore presented separately from the current fiscal year.

21

2. Notes to Consolidated Balance Sheet (1) Assets offered as collateral and collateralized loans

(Assets offered as collateral) Buildings and structures 14,124 million yen Machinery, equipment and vehicles 387 million yen Land 6,144 million yen Intangible assets 135 million yen Investment securities 1,404 million yen Total 22,195 million yen of which assets offered as foundation mortgage 5,824 million yen

(Collateralized loans)

Short-term loans payable 35,099 million yen Long-term loans payable 21,943 million yen Total 57,042 million yen of which loans collateralized as foundation mortgage 48,456 million yen

(2) Accumulated depreciation of property, plant and equipment 37,030 million yen

The accumulated amount of impairment loss is included in the amount of accumulated depreciation. (3) Notes discounted 155 million yen (4) Financial covenants

Among loans, an amount of 26,555 million yen is subject to financial covenants, primarily the following covenant. Ordinary income (loss) presented in the consolidated statement of income for the accounting period of each fiscal year shall not be allowed to become a loss for two consecutive fiscal years.

3. Notes to Consolidated Statement of Changes in Net Assets (1) Type and total number of issued shares as of this fiscal year-end

Common stock 129,370,899 shares (2) Dividends

Dividends paid

Resolution Type of stock Source of dividend

Total dividends

(million yen)

Dividend per share

(yen) Record date Effective

date

Ordinary General Meeting of

Shareholders on March 28, 2012

Common stock

Retained earnings 387 3.00 December

31, 2011 March 29,

2012

4. Notes on Financial Instruments (1) Status of financial instruments

The Group procures necessary funds mainly by borrowing from financial institutions based on the capital investment plan. A temporary surplus fund is invested in financial assets that are highly secure. For customer credit risk concerning trade receivables (notes and accounts receivable-trade), write-off risk is kept lower by the division in charge according to the credit control rules. Investment securities are mainly stocks and the market value of listed stocks is checked quarterly. Borrowed money is used for working funds (mainly short-term) and capital investment funds (long-term). Interest-swap contracts are used against the interest fluctuation risk of some long-term loans payable, in order to fix the amount of interest expenses. Derivative transactions (related to foreign

22

exchange and interest rate) are conducted only in the scope of practical purposes according to the internal control rules.

(2) Current value of financial instruments

The amounts posted on the consolidated balance sheet, current values, and differences thereof as of December 31, 2012 (consolidated balance sheet date for this fiscal year) are as follows: Financial instruments whose current value is deemed to be difficult to identify are not included.

(million yen)

Consolidated balance sheet amount (*1)

Current value (*1) Difference

(1) Cash and deposits 8,066 8,066 ―(2) Notes and accounts receivable-trade (*2) 19,758 19,758 ―(3) Investment securities Other securities 1,846 1,846 ―(4) Notes and accounts payable-trade [10,112] [10,112] ―(5) Accounts payable-other [2,198] [2,198] ―(6) Short-term loans payable (*3) [42,407] [42,407] ―(7) Long-term loans payable (*3) [36,741] [36,770] 29(8) Derivative transactions of which hedge accounting is not applied [2,010] [2,010] ― of which hedge accounting is applied [192] [192] ―

(*1) Amounts for which the net total is payable are shown in [ ]. (*2) Notes and accounts receivable-trade are the net of the allowance for doubtful accounts. (*3) Current portion of long-term loans payable, an item included in short-term loans payable in the consolidated

balance sheet, is included in long-term loans payable here. Note 1: Method for calculating the current value of financial instruments (1) Cash and deposits, and (2) Notes and accounts receivable-trade:

Since the settlement periods for the foregoing are short, the current values thereof are almost equal to the carrying amount. Therefore, the corresponding carrying amount is used as the current value.

(3) Investment securities:

The going share price on the exchange is used as the current value. (4) Notes and accounts payable-trade, (5) Accounts payable-other, and (6) Short-term loans payable:

Since the settlement periods for the foregoing are short, the current values thereof are almost equal to the carrying amount. Therefore, the corresponding carrying amount is used as the current value.

(7) Long-term loans payable:

The current value of long-term loans payable is calculated by discounting the total of principal and interest by an interest rate assumed in cases where similar borrowing is to be newly conducted.

(8) Derivative transactions:

The current value for derivative transactions is calculated based on the prices submitted by financial institutions.

Note 2: Non-listed stocks (408 million yen included in the consolidated balance sheet) are not included in

“(3) Investment securities Other securities” as the identification of the current values is deemed to be extremely difficult because of the absence of market values and the inability to estimate future cash flows.

5. Notes on Per Share Information (1) Net assets per share 35.91 yen (2) Net loss per share 64.56 yen

23

6. Notes on Significant Subsequent Events Solicitation of applicants for voluntary retirement (1) Solicitation of applicants for voluntary retirement

The Company has decided to solicit applicants for voluntary retirement in order to streamline personnel levels at the Company and group companies in Japan as part of the “JUKI structural reform plan.”

(2) Outline of solicitation of applicants for voluntary retirement (the Company)

1) Number of applicants to be solicited 200 employees 2) Applicants to be solicited Regular employees (those who will have continuously

worked at the Company for at least three years and are at least 40 years of age as of March 31, 2013)

Part-timers and contract employees (no age limitation) 3) Solicitation period February 12, 2013 to February 25, 2013 4) Date of retirement March 31, 2013 5) Incentives Retirees will be paid the prescribed retirement allowance

with an additional special payment. Assistance in finding work will be provided for those who

apply for such assistance. (3) Future outlook

The solicitation of applicants for voluntary retirement described above is expected to result in extraordinary loss recorded as special retirement expenses in the first quarter of the fiscal year ending December 31, 2013. However, at present the number of applicants is yet to be determined and the amount to be paid is unknown.

24

Non-consolidated Financial Statements (January 1, 2012 - December 31, 2012)

Non-consolidated Balance Sheet


(million yen) Description Amount Description Amount

(Assets) (Liabilities) Current assets 36,453 Current liabilities 51,153

Cash and deposits 1,487 Notes payable-trade 4,342 Notes receivable-trade 1,791 Accounts payable-trade 5,190 Accounts receivable-trade 20,848 Short-term loans payable 35,281 Merchandise and finished goods 7,519 Lease obligations 198 Work in process 1,240 Accounts payable-other 1,222 Raw materials and supplies 59 Accrued expenses 1,543 Short-term loans receivable 1,211 Income taxes payable 72 Accounts receivable-other 1,043 Deposits received 219

Deferred tax assets 227 Deposits received from subsidiaries and affiliates 1,292

Other 1,618 Notes payable-facilities 5 Allowance for doubtful accounts (593) Forward exchange contracts 1,739

Noncurrent assets 53,935 Other 45 Property, plant and equipment 17,299 Noncurrent liabilities 28,160

Buildings, net 10,762 Long-term loans payable 22,926 Structures, net 216 Lease obligations 347

Machinery and equipment, net 158 Long-term accounts payable-other 118

Vehicles, net 0 Provision for retirement benefits 4,583

Tools, furniture and fixtures, net 357 Provision for directors’ retirement benefits 98

Land 5,434 Other 84 Lease assets, net 359 Total liabilities 79,313 Construction in progress 9 (Net assets)

Intangible assets 884 Shareholders’ equity 10,988 Patent right 195 Capital stock 15,950 Software 504 Retained earnings (4,902) Lease assets 168 Legal retained earnings 77 Other 14 Other retained earnings (4,980)

Investments and other assets 35,751 Retained earnings brought forward (4,980)

Investment securities 1,867 Treasury stock (59)

Stocks of subsidiaries and affiliates 16,771 Valuation and translation adjustments 86

Investments in capital of subsidiaries and affiliates 6,918 Valuation difference on

available-for-sale securities 223

Investments in capital 187 Deferred gains or losses on hedges (136)

Long-term loans receivable from subsidiaries and affiliates 10,200

Long-term loans receivable from employees 75 Claims provable in bankruptcy, claims

provable in rehabilitation and other 185

Long-term prepaid expenses 182 Deferred tax assets 399 Other 180 Allowance for doubtful accounts (593) Allowance for investment loss (622) Total net assets 11,074

Total assets 90,388 Total liabilities and net assets 90,388 (Note) Figures less than one million yen are rounded down to the nearest million.

25

Non-consolidated Statement of Income (January 1, 2012 - December 31, 2012)

(million yen)

Description Amount

Net sales 49,009

Cost of sales 41,401

Gross profit 7,608

Selling, general and administrative expenses 10,879

Operating loss 3,271

Non-operating income

Interest income and dividends income 756

Commission fee 1,909

Reversal of allowance for investment loss 98

Other 241 3,005

Non-operating expenses

Interest expenses 1,061

Foreign exchange losses 295

Other 79 1,436

Ordinary loss 1,702

Extraordinary income

Gain on sales of noncurrent assets 8

Gain on liquidation of subsidiaries and affiliates 11 20

Extraordinary loss

Loss on sales and retirement of noncurrent assets 7

Loss on valuation of investment securities 5

Loss on valuation of stocks of subsidiaries and affiliates 191

Other 15 219

Loss before income taxes 1,901

Income taxes-current 142

Income taxes-deferred 5,191 5,333

Net loss 7,234 (Note) Figures less than one million yen are rounded down to the nearest million.

26

Non-consolidated Statement of Changes in Net Assets (January 1, 2012 - December 31, 2012)

(million yen)

Shareholders’ equity Retained earnings

Other retained earnings

Capital stock Legal retained earnings

Retained earnings brought forward

Total retained earnings

Treasury stock Total

shareholders’equity

Balance at the beginning of current period 15,950 38 2,681 2,719 (58) 18,611


Provision of legal retained earnings 38 (38) – –

Dividends from surplus (387) (387) (387)

Net loss (7,234) (7,234) (7,234)Purchase of treasury stock (0) (0)

Net changes of items other than shareholders’ equity

–

Total changes of items during the period – 38 (7,661) (7,622) (0) (7,623)

Balance at the end of current period 15,950 77 (4,980) (4,902) (59) 10,988

(million yen)

Valuation and translation adjustments

Valuation difference on

available-for-sale securities

Deferred gains or losses on hedges

Total valuation and translation adjustments

Total net assets

Balance at the beginning of current period 23 (78) (54) 18,556


Provision of legal retained earnings –

Dividends from surplus (387)

Net loss (7,234)Purchase of treasury stock (0)

Net changes of items other than shareholders’ equity

199 (58) 141 141

Total changes of items during the period 199 (58) 141 (7,482)

Balance at the end of current period 223 (136) 86 11,074

(Note) Figures less than one million yen are rounded down to the nearest million.

27

Notes to Non-consolidated Financial Statements 1. Notes on Significant Accounting Policies (1) Standards and methods for valuation of assets

1) Securities Stocks of subsidiaries and affiliates

Stated at cost using the moving-average method

Available-for-sale securities with market quotations Stated based on the market price, etc. on the balance sheet date (Unrealized gains and losses are excluded from income and reported in a separate component of net assets. The cost of sales is calculated using the moving-average method.)

Available-for-sale securities without market quotations

Stated at cost using the moving-average method 2) Derivatives

Stated mainly at market 3) Inventories

Stated at the lower of cost Merchandise and finished goods and work in process

Using the average method

Raw materials and supplies Using the last cost method (2) Depreciation & amortization method for noncurrent assets

1) Property, plant and equipment (excluding lease assets) The declining-balance method is applied. However, the straight-line method is applied for buildings acquired on and after April 1, 1998 (excluding any building fixtures).

The main economic useful lives are as follows:

Buildings and structures 3 - 50 yearsMachinery and equipment and vehicles 2 - 15 yearsTools, furniture and fixtures 2 - 20 years

2) Intangible assets (excluding lease assets) and long-term prepaid expenses

The straight-line method is applied. However, software bundled with computer hardware is amortized every fiscal year by no less than an equal amount calculated based on effective years (5 years), and computer software for internal use is amortized by the straight-line method over the estimated useful life (5 years).

3) Lease assets

Lease assets pertaining to finance leases without ownership transfer of the lease assets to the lessee The straight-line method is applied on the assumptions that the useful life equals the lease term and the residual value equals zero; provided, however, that lease assets whose leasing started on or before March 31, 2008 are accounted for by the accounting method used for ordinary lease transactions.

(3) Standards for recognition of reserves

1) Allowance for doubtful accounts For loss caused by uncollectible debt, an allowance for doubtful accounts is provided based on the historical write-off rate for ordinary receivables and the estimated amount of irrecoverable debt based on the recoverability of individual cases for specified receivables such as debt with a possibility of default.

2) Allowance for investment loss

For loss caused by investment in subsidiaries, the amount deemed necessary is provided in consideration of the financial status, etc. of the subsidiaries.

28

3) Provision for retirement benefits A provision for retirement benefits is provided based on the estimated retirement benefit obligation and pension plan assets as of this fiscal year-end. Actuarial calculation differences are amortized on a straight-line basis over a period equal to or less than the average remaining service period for employees at the time such gains or losses are realized (10 years). The amortization of net gains or losses starts from the fiscal year immediately following the year in which such gains or losses are realized. Prior service cost is amortized wholly in the fiscal year in which it is realized.

4) Provision for directors’ retirement benefits

The system of directors’ retirement benefits was abolished with a cut-off date of June 28, 2007. The estimated amount payable as of the cut-off date is provided.

(4) Other significant basic matters for the preparation of financial statements

1) Standards for translation of assets and liabilities in foreign currencies into yen Monetary assets and liabilities in foreign currencies are translated into yen based on the spot exchange-rate in the foreign exchange market on the balance sheet date, and the foreign exchange gains and losses from the translations are recognized in the income statement.

2) Accounting for hedging activities

A. Method Deferred hedge accounting is applied. Designation is applied to forward exchange contracts that qualify for designation, and designated exceptional accounting is applied to interest-rate swaps that qualify for exceptional accounting.

B. Means for hedging and hedged item

Means for hedging Hedged item Interest-rate swap Long-term loans payable Forward exchange contract Foreign currency receivables (including forecast transactions)

C. Hedging policy

Based on internal rules, hedging is limited to transactions (including forecast transactions) in the scope of practical purposes under the management of the department in charge of finance, and is undertaken to avoid future risks from fluctuations in interest rates and foreign exchange rates.

D. Method for assessing the effectiveness of hedges

At the start of hedging, the Company assesses the effectiveness of offset in interest rate or foreign exchange rate fluctuation. Then, during the period of hedging, the Company uses the predetermined assessment method to assess whether the high effectiveness of offset is maintained at every fiscal year-end. For forward exchange contracts, assessment of the effectiveness of hedges is omitted as important terms regarding hedged items and means for hedging are the same, and changes in the cash flow from foreign exchange rate fluctuations are expected to be completely offset. Assessment of the effectiveness of interest-rate swaps subject to designated exceptional accounting is also omitted.

(Additional information) Treatment of forward exchange contracts on forecasted foreign currency-denominated transactions Primarily because of recent substantial fluctuations in foreign exchange rates, the Company changed its internal regulations and carried out forward exchange contracts on forecasted foreign currency-denominated transactions. Consequently, the Company is applying hedge accounting to some of these contracts and carrying out deferred hedge accounting from the current fiscal year. As a result, 70 million yen of valuation difference on forward exchange contracts has been recorded in deferred gains or losses on hedges (debit).

3) Accounting for consumption taxes

The tax-exclusion method is applied for consumption tax and local consumption tax.

29

2. Notes to Non-consolidated Balance Sheet (1) Assets offered as collateral and collateralized loans

(Assets offered as collateral) Buildings and structures 10,433 million yen Machinery and equipment 65 million yen Land 4,758 million yen Investment securities 1,404 million yen Total 16,661 million yen of which assets offered as foundation mortgage 1,382 million yen

(Collateralized loans)

Short-term loans payable 30,032 million yen Long-term loans payable 20,119 million yen Deposits received 78 million yen Total 50,230 million yen of which loans collateralized as foundation mortgage 42,848 million yen

(2) Accumulated depreciation of property, plant and equipment 15,293 million yen (3) Guarantee liability

(million yen) Guarantee Guaranteed amount Details

JUKI SINGAPORE PTE. LTD. 3,160 Guarantee on borrowing JUKI (CHINA) CO., LTD. 3,029 Guarantee on borrowing JUKI (SHANGHAI) INDUSTRIAL CO., LTD. 1,519 Guarantee on borrowing JUKI CENTRAL EUROPE SP.ZO.O. 542 Guarantee on borrowing JUKI (VIETNAM) CO., LTD. 529 Guarantee on borrowing JUKI AMERICA, INC. 259 Guarantee on borrowing JUKI (HONG KONG) LTD. 144 Guarantee on borrowing JUKI METAL CORPORATION 118 Guarantee on leasing JUKI SALES (JAPAN) CORPORATION 106 Guarantee on borrowing

Total 9,410 (4) Monetary receivables from and payables to subsidiaries and affiliates

Short-term monetary receivables 23,877 million yenLong-term monetary receivables 111 million yenShort-term monetary payables 6,678 million yen

(5) Financial covenants

Among loans, an amount of 26,555 million yen is subject to financial covenants, primarily the following covenant. Ordinary income (loss) presented in the non-consolidated statement of income for the accounting period of each fiscal year shall not be allowed to become a loss for two consecutive fiscal years.

3. Notes to Non-consolidated Statement of Income Transactions with subsidiaries and affiliates

Net sales 43,378 million yenPurchase 28,617 million yenOther operating transactions 3,877 million yenTransactions other than operating transactions 2,662 million yen

30

4. Notes to Non-consolidated Statement of Changes in Net Assets

Type and number of treasury shares as of this fiscal year-end Common stock 154,570 shares

5. Notes on Tax Effect Accounting (1) Major causes for accrual of deferred tax assets and deferred tax liabilities

(million yen) - Current: Deferred tax assets: Loss on valuation of inventories 217 Income taxes payable 7 Allowance for doubtful accounts 211 Loss brought forward 171 Other 56

Total 663 Valuation allowance (436)

Total deferred tax assets 227

- Noncurrent: Deferred tax assets: Provision for retirement benefits 1,665 Provision for directors’ retirement benefits 35 Allowance for doubtful accounts 207 Impairment loss 219 Allowance for investment loss 221 Loss on valuation of stocks of subsidiaries and affiliates 2,533 Loss brought forward 6,493 Other 146

Total 11,523 Valuation allowance (10,999)

Total deferred tax assets 523

Deferred tax liabilities: Valuation difference on available-for-sale securities 123

Total deferred tax liabilities 123

Net deferred tax assets 399

31

6. Notes on Leased Noncurrent Assets

(Finance lease transactions other than those in which ownership of the leased items is deemed to be transferred to the lessee)

(1) Amounts equivalent to purchase price, accumulated depreciation, and fiscal year-end balance

(million yen)

Category Amount equivalent to purchase price

Amount equivalent to accumulated depreciation

Amount equivalent to fiscal year-end balance

Machinery and equipment 198 182 15 Tools, furniture and fixtures 8 8 0 Software 3 3 0

(2) Amount equivalent to the fiscal year-end balance of future lease payments

Within one year 17 million yenExceeding one year 3 million yenTotal 21 million yen

(3) Lease payments, amount equivalent to depreciation, and amount equivalent to interest expenses

Lease payments 37 million yenAmount equivalent to depreciation 30 million yenAmount equivalent to interest expenses 1 million yen

(4) Method for calculating the amount equivalent to depreciation The straight-line method is applied on the assumptions that the useful life equals the lease term and the residual value equals zero.

(5) Method for calculating the amount equivalent to interest expenses

The difference between the total lease payment and the amount equivalent to the purchase price of leased items is used as the amount equivalent to interest expenses and is allocated to each fiscal term according to the interest method.

32

7. Notes on Transactions with Related Parties Subsidiaries and affiliates

Receivables or payables on transactions

Category Company name

Ownership of voting rights, etc.

(Ownership percentage)

Relationship with the

related parties

Transaction details

Transaction amounts

(million yen) Account item

Fiscal year-end balance (million

yen) Sales of products 15,220 Accounts

receivable-trade 8,079JUKI SINGAPORE PTE. LTD.

Direct ownership 100%

Sales and maintenance of the Company’s products

Debt guarantee 3,160 – –

TOKYO JUKI INTERNATIONAL TRADE (SHANGHAI) CO., LTD.



Sales of products 6,807 Accounts

receivable-trade 1,327

Provision of loan 1,723 Long-term loans

receivable 7,064

Receipt of interest 125 – –JUKI (CHINA) CO.,

LTD. Direct ownership 100%

Sales and maintenance of the Company’s products Debt guarantee 3,029 – –

JUKI CENTRAL EUROPE SP.ZO.O.






receivable-trade 1,940JUKI AUTOMATION SYSTEMS INC.



– – Long-term receivable 111

JUKI AUTOMATION SYSTEMS AG. (Switzerland)





Purchase of products 10,871 Notes

payable-trade 2,130

– – Accounts payable-trade 517

Operations consignment fee income, etc.

326 – –

JUKI DENSHI KOGYO CORPORATION


Manufacture of the Company’s products

Receipt of collateral (Note 3) – –

Purchase of products 4,770 Accounts

payable-trade 1,311

Receipt of interest 22 Long-term loans

receivable 1,268

Technical advisory fee income, etc.

450 – –

JUKI (SHANGHAI) INDUSTRIAL CO., LTD.

Direct ownership 27.5% Indirect ownership 72.5%

Manufacture of the Company’s products

Debt guarantee 1,519 – –Recovery of funds 10 Long-term loans

receivable 920

JUKI HIROSHIMA CORPORATION


Manufacture of the Company’s products and provision of loan

Receipt of interest 0 – –

Sales of products 4,105 Notes

receivable-trade 971

– – Accounts receivable-trade 108

Subsidiaries

JUKI AMERICA, INC.



(Allowance for investment loss)

(622) – –

33

Receivables or payables on transactions

Category Company name

Ownership of voting rights, etc.

(Ownership percentage)

Relationship with the

related parties

Transaction details

Transaction amounts

(million yen) Account item

Fiscal year-end balance (million

yen)

JUKI SMT ASIA CO., LTD.





JUKI SALES (JAPAN) CORPORATION




receivable-trade 1,192Subsidiaries

JUKI INDIA PVT. LTD.

Indirect ownership 100%


Sales of products 668 Accounts


Terms for transactions and policies to decide them: (Notes) 1. Terms for sales and purchases are decided in consideration of factors such as market prices. 2. Loan rates are decided in consideration of market interest rates and the financial status of

borrowers. 3. Real estate owned by JUKI DENSHI KOGYO CORPORATION has been received as collateral

against the Company’s borrowings from financial institutions (revolving mortgage at a maximum 2,000 million yen). No fees connected with collateral pledging have been paid.

4. The allowance for investment loss provided for JUKI AMERICA, INC. is based on valuation of the stocks of subsidiaries and affiliates.

5. Technical advisory fee income and operations consignment fee income are decided in consideration of factors such as market prices.

6. Debt guarantee for JUKI SINGAPORE PTE. LTD., JUKI (CHINA) CO., LTD., and JUKI (SHANGHAI) INDUSTRIAL CO., LTD. is provided with regard to borrowing from banks.

7. 1,001 million yen in allowance for doubtful accounts has been recorded regarding claims to subsidiaries with a possibility of default. In relation to this allowance, a total of 164 million yen of provision of allowance for doubtful accounts has been recorded in the fiscal year under review.

8. Transaction amounts do not include consumption taxes. The fiscal year-end balance includes consumption taxes.

8. Notes on Per Share Information

(1) Net assets per share 85.71 yen(2) Net loss per share 55.99 yen

34

9. Notes on Significant Subsequent Events Solicitation of applicants for voluntary retirement (1) Solicitation of applicants for voluntary retirement

The Company has decided to solicit applicants for voluntary retirement in order to streamline personnel levels as part of the “JUKI structural reform plan.”

(2) Outline of solicitation of applicants for voluntary retirement

1) Number of applicants to be solicited 200 employees 2) Applicants to be solicited Regular employees (those who will have continuously

worked at the Company for at least three years and are at least 40 years of age as of March 31, 2013)

Part-timers and contract employees (no age limitation) 3) Solicitation period February 12, 2013 to February 25, 2013 4) Date of retirement March 31, 2013 5) Incentives Retirees will be paid the prescribed retirement allowance

with an additional special payment. Assistance in finding work will be provided for those who

apply for such assistance. (3) Future outlook

The solicitation of applicants for voluntary retirement described above is expected to result in extraordinary loss recorded as special retirement expenses in the first quarter of the fiscal year ending December 31, 2013. However, at present the number of applicants is yet to be determined and the amount to be paid is unknown.

35

(English Translation) Certified copy of Accounting Auditor’s audit report on the Consolidated Financial Statements

Independent Auditor’s Report

February 6, 2013 To the Board of Directors JUKI CORPORATION

Deloitte Touche Tohmatsu LLC

Mitsuru Hirano, CPA Designated Unlimited Liability Partner, Engagement Partner Akio Kimura, CPA Designated Unlimited Liability Partner, Engagement Partner

Pursuant to Paragraph 4 of Article 444 of the Companies Act, we have audited the consolidated financial

statements, that is, the consolidated balance sheet, consolidated statement of income, consolidated statement of changes in net assets and notes to consolidated financial statements of JUKI CORPORATION (the “Company”) for the fiscal term from January 1, 2012 to December 31, 2012. The responsibility of management concerning the consolidated financial statements

The responsibility of management is to prepare consolidated financial statements in accordance with business accounting standards generally accepted in Japan and present appropriate accounting information. This responsibility includes the establishment and operation of internal controls deemed necessary by management for the preparation of consolidated financial statements free of material misstatement due to fraud or error and the presentation of appropriate accounting information. The responsibility of independent auditors

Our responsibility is to express an opinion independently on the consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those auditing standards require that we plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements are free of material misstatement.

In audits, procedures are conducted in order to obtain audit evidence supporting the amounts and disclosures in the consolidated financial statements. Audit procedures are chosen and applied in accordance with our judgment, based on the risk assessment of material misstatement in the consolidated financial statements due to fraud or error. The purpose of an audit is not to express an opinion on the effectiveness of internal controls. However, we examine internal controls related to the preparation of consolidated financial statements and the appropriate presentation in the course of conducting risk assessment, in order to plan audit procedures appropriate to the circumstances. An audit includes assessing the accounting policies used, its application method and estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that we have obtained sufficient and appropriate audit evidence to support our audit opinion. Audit opinion

In our opinion, the above consolidated financial statements fairly present, in every material aspect, the financial position and results of operations of the Group consisting of the Company and its consolidated subsidiaries for the relevant term of the consolidated financial statements, in accordance with the business accounting standards generally accepted in Japan. Interests in the Company

Our firm and engagement partners have no interest in the Company which shall be disclosed pursuant to the provisions of the Certified Public Accountants Act. ____________________ Notice to Readers: The original consolidated financial statements, which consist of the consolidated balance sheet, the

consolidated statement of income, the consolidated statement of changes in net assets and the notes to consolidated financial statements, are written in Japanese.

36

(English Translation) Certified copy of Accounting Auditor’s audit report on the Non-consolidated Financial Statements

Independent Auditor’s Report

February 6, 2013 To the Board of Directors JUKI CORPORATION

Deloitte Touche Tohmatsu LLC

Mitsuru Hirano, CPA Designated Unlimited Liability Partner, Engagement Partner Akio Kimura, CPA Designated Unlimited Liability Partner, Engagement Partner

Pursuant to Paragraph 2-Item 1 of Article 436 of the Companies Act, we have audited the

non-consolidated financial statements, that is, the non-consolidated balance sheet, non-consolidated statement of income, non-consolidated statement of changes in net assets and notes to non-consolidated financial statements, and the supplementary schedules of JUKI CORPORATION (the “Company”) for the 98th fiscal term from January 1, 2012 to December 31, 2012. The responsibility of management concerning the non-consolidated financial statements, etc.

The responsibility of management is to prepare non-consolidated financial statements and the supplementary schedules in accordance with business accounting standards generally accepted in Japan and present appropriate accounting information. This responsibility includes the establishment and operation of internal controls deemed necessary by management for the preparation of non-consolidated financial statements, and the supplementary schedules, free of material misstatement due to fraud or error and the presentation of appropriate accounting information. The responsibility of independent auditors

Our responsibility is to express an opinion independently on the non-consolidated financial statements and the supplementary schedules based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those auditing standards require that we plan and perform the audit to obtain reasonable assurance as to whether the non-consolidated financial statements and the supplementary schedules are free of material misstatement.

In audits, procedures are conducted in order to obtain audit evidence supporting the amounts and disclosures in the non-consolidated financial statements and the supplementary schedules. Audit procedures are chosen and applied in accordance with our judgment, based on the risk assessment of material misstatement in the non-consolidated financial statements, and the supplementary schedules, due to fraud or error. The purpose of an audit is not to express an opinion on the effectiveness of internal controls. However, we examine internal controls related to the preparation of non-consolidated financial statements, and the supplementary schedules, and the appropriate presentation in the course of conducting risk assessment, in order to plan audit procedures appropriate to the circumstances. An audit includes assessing the accounting policies used, its application method and estimates made by management, as well as evaluating the overall presentation of the non-consolidated financial statements and the supplementary schedules.

We believe that we have obtained sufficient and appropriate audit evidence to support our audit opinion. Audit opinion

In our opinion, the above non-consolidated financial statements and supplementary schedules fairly present, in every material aspect, the financial position and results of operations of the Company for the relevant term of the non-consolidated financial statements and the supplementary schedules, in accordance with the business accounting standards generally accepted in Japan.

37

Interests in the Company Our firm and engagement partners have no interest in the Company which shall be disclosed pursuant to

the provisions of the Certified Public Accountants Act. ____________________ Notice to Readers: The original non-consolidated financial statements, which consist of the non-consolidated balance sheet,

the non-consolidated statement of income, the non-consolidated statement of changes in net assets and the notes to non-consolidated financial statements, and the supplementary schedules thereof, are written in Japanese.

38

(English Translation) Certified copy of the Audit & Supervisory Board’s audit report

Audit Report

The Audit & Supervisory Board, following review and deliberations on the reports made by each Audit & Supervisory Board Member concerning the execution of duties by Directors for the 98th fiscal term from January 1, 2012 to December 31, 2012, prepared this Audit Report and hereby submit it as follows: 1. Summary of Auditing Methods by Audit & Supervisory Board Members and the Audit & Supervisory Board

The Audit & Supervisory Board established auditing policies and the division of duties, received reports regarding the status of audits and the results thereof from each Audit & Supervisory Board Member, received reports regarding the status of the execution of duties from Directors and the Accounting Auditor, and requested explanation as necessary.

In accordance with the auditing standards for Audit & Supervisory Board Members determined by the

Audit & Supervisory Board, and in compliance with auditing policies and the division of duties, each Audit & Supervisory Board Member made efforts to collect information and establish auditing circumstances through communication with Directors, internal audit staff and other employees, and attended the Board of Directors’ meetings and other important meetings to receive reports regarding execution of duties from Directors and employees, and requested explanations as necessary. Each Audit & Supervisory Board Member also inspected the approved documents and examined the status of operations and conditions of assets at the head office and principal offices. Each Audit & Supervisory Board Member verified the resolutions adopted by the Board of Directors regarding the establishment of a system for ensuring that the Directors’ duties, as stated in the business report, are executed in conformity of laws and regulations, and the Articles of Incorporation of the Company, and the establishment of a system necessary to ensure proper business operations of a stock company set forth in Paragraphs 1 and 3 of Article 100 of the Ordinance for Enforcement of the Companies Act. It also regularly received reports from Directors and employees on the status of the establishment and operation of the system (internal control system) established in accordance with such resolutions adopted by the Board of Directors, and requested explanations as necessary and expressed his/her opinions. With regard to the internal control over financial reporting, Audit & Supervisory Board Members received reports from Directors and Deloitte Touche Tohmatsu LLC on the status of discussion between them and the evaluation of such internal control and the status of audit, and requested explanations as necessary.

Audit & Supervisory Board Members communicated and shared information with the directors etc. of

the subsidiaries and received from the subsidiaries their business reports as necessary. In accordance with the procedures mentioned above, we reviewed the business reports and supplementary schedules for the fiscal term ended December 31, 2012.

Further, Audit & Supervisory Board Members monitored and verified that the Accounting Auditor

maintains independence and conduct the audits appropriately. Each Audit & Supervisory Board Member also received reports on the status of the execution of duties from Accounting Auditor and requested explanation as necessary. In addition, we were informed of the arrangement of the “System for ensuring that the duties are performed appropriately” (matters stipulated in the items of Article 131 of the Corporate Calculation Regulations in accordance with “Standards for the Quality Control of Audits” (Business Accounting Council, October 28, 2005)) from the Accounting Auditor and requested explanations as necessary. In accordance with the procedures mentioned above, we reviewed the non-consolidated financial statements (non-consolidated balance sheet, non-consolidated statement of income, non-consolidated statement of changes in net assets and notes to non-consolidated financial statements), the supplementary schedules thereto, and the consolidated financial statements (consolidated balance sheet, consolidated statement of income, consolidated statement of changes in net assets and notes to consolidated financial statements) for the fiscal term ended December 31, 2012.

39

2. Results of Audit (1) Results of Audit of Business Report and Other Relevant Documents

1. The business report and supplementary schedules present fairly the financial condition of the Company in conformity with related laws and regulations and the Articles of Incorporation of the Company.

2. Regarding the execution of duties by Directors, there were no instances of misconduct or material matters in violation of laws and regulations, nor of the Articles of Incorporation of the Company.

3. The resolution of the Board of Directors regarding the internal control system is fair and reasonable. There are no matters requiring additional comment regarding the contents of the business report on such internal control and the execution of duties by Directors. With regard to the internal control over financial reporting, the Audit & Supervisory Board received reports from Directors and Deloitte Touche Tohmatsu LLC that there were no material defects as of the date this audit report was prepared.

(2) Results of Audit of Non-consolidated Financial Statements and Supplementary Schedules

The auditing methods and results of the Accounting Auditor, Deloitte Touche Tohmatsu LLC, are fair and reasonable.

(3) Results of Audit of Consolidated Financial Statements

The auditing methods and results of the Accounting Auditor, Deloitte Touche Tohmatsu LLC, are fair and reasonable.

February 7, 2013

Audit & Supervisory Board, JUKI CORPORATION

Audit & Supervisory Board Member (Full-time) Yoshihiro Otake Audit & Supervisory Board Member Kousuke Inoue Audit & Supervisory Board Member Masato Tanaka

(Note) Audit & Supervisory Board Members Kousuke Inoue and Masato Tanaka are Outside Audit &

Supervisory Board Members who are required to be appointed in accordance with Item 16 of Article 2 and Paragraph 3 of Article 335 of the Companies Act.

40

Reference Materials for the Ordinary General Meeting of Shareholders Proposals and Reference Matters First proposal: Partial Amendments to the Articles of Incorporation 1. Reasons

With the partial amendments, special titles for Directors will be discontinued, and Directors will be re-classified into two categories: Representative Directors and Directors (including Outside Directors). In addition, references to Senior Advisors will be deleted.

2. Details

Details of the amendment are as follows: (Note: In case that change in original Japanese text does not effect a substantial change in the meaning, no change is made in English translation.)

(Underlined parts are amended.)

Current Articles of Incorporation Proposed Amendments CHAPTER III GENERAL MEETING OF

SHAREHOLDERS CHAPTER III GENERAL MEETING OF

SHAREHOLDERS Article 14. (Omitted) Article 14. (Remained unchanged) (Convener and chairperson) (Convener and chairperson) Article 15. The General Meeting of Shareholders shall

be convened and chaired by the President unless otherwise provided for in laws and regulations.

Article 15. The General Meeting of Shareholders shall be convened and chaired by a Representative Director unless otherwise provided for in laws and regulations.

(Newly established) 2. In cases where there is more than one Representative Director, the convener and chairperson for the General Meeting of Shareholders shall be selected in accordance with an order previously determined at the Board of Directors.

In cases where the President is unable to be the convener and chairperson, another Director shall perform these duties as a substitute, and such Director shall be selected in accordance with an order previously determined by a resolution of the Board of Directors.

3. In cases where no Representative Director is able to be the convener and chairperson, another Director shall convene and chair the General Meeting of Shareholders, and such Director shall be selected in accordance with an order previously determined at the Board of Directors.

CHAPTER IV DIRECTORS AND THE BOARD OF

DIRECTORS

CHAPTER IV DIRECTORS AND THE BOARD OF

DIRECTORS Article 20 through Article 22 (Omitted) Article 20 through Article 22 (Remained unchanged)(Representative Directors and Directors with special

titles) (Representative Directors)

Article 23. The Board of Directors shall select Representative Directors by its resolution.

Article 23. The Board of Directors shall select Representative Directors by its resolution.

2. The Board of Directors shall be permitted to select one Chairman, one President, and several Executive Vice-Presidents, Senior Managing Directors and Managing Directors, by its resolution.

<Deleted>

Article 24. (Omitted) Article 24. (Remained unchanged) (Convener and chairperson of the Board of Directors’

meetings) (Convener and chairperson of the Board of Directors’

meetings)

41

(Underlined parts are amended.)Current Articles of Incorporation Proposed Amendments

Article 25. The Board of Directors’ meetings shall be convened and chaired by the President unless otherwise provided for in laws and regulations.

Article 25. The Board of Directors’ meetings shall be convened and chaired by a Representative Director unless otherwise provided for in laws and regulations.

(Newly established) 2. In cases where there is more than one Representative Director, the convener and chairperson for the Board of Directors’ meetings shall be selected in accordance with an order previously determined at the Board of Directors.

2. In cases where the President is unable to be the convener and chairperson, another Director shall perform these duties as a substitute, and such Director shall be selected in accordance with an order previously determined at the Board of Directors.

3. In cases where no Representative Director is able to be the convener and chairperson, another Director shall convene and chair the Board of Directors’ meetings, and such Director shall be selected in accordance with an order previously determined at the Board of Directors.

Article 26 through Article 28 (Omitted) Article 26 through Article 28 (Remained unchanged)(Senior Advisors) <Deleted> Article 29. By resolution of the Board of Directors,

Senior Advisors may be put in place.

Article 30 through Article 48 (Omitted) Article 29 through Article 47 (Remained unchanged)

42

Second proposal: Election of 6 Directors

The term of office of all (7) Directors will expire at the conclusion of this General Meeting of Shareholders. Accordingly, the election of 6 Directors (including 1 Outside Director) is proposed.

The candidates for Directors are as follows:

No. Name (Date of birth)

Career summary, positions, responsibilities, and significant concurrent positions

Number of shares of the

Company heldApril 1966 Joined Fuji Bank Limited (currently Mizuho

Bank, Ltd.) June 1993 Director, ditto June 1996 Joined the Company, Senior Managing

Director June 1997 Representative Senior Managing Director June 1999 President June 2010 Chairman

1 Kazuyuki Nakamura (August 19, 1943)

(To the present)

104,000 shares

April 1974 Joined Fuji Bank Limited (currently Mizuho Bank, Ltd.)

April 2002 Executive Officer and General Manager of Corporate Planning Dept. of Mizuho Bank, Ltd.

March 2003 Managing Executive Officer, ditto March 2007 President of Mizuho Capital Co., Ltd. May 2009 Joined the Company, Advisor June 2009 Senior Managing Director, CAO, and CCO July 2009 Senior Managing Director, CFO, CAO, and

CCO June 2010 President

2 Akira Kiyohara (November 26, 1951)

(To the present)

73,000 shares

December 1972 Joined the Company April 1988 Branch Manager of Tohoku Branch,

Industrial Products Sales HQ of Industrial Sewing Machines Div.

October 1999 General Manager of General Affairs Dept. and General Manager of Secretariat & Public Relations Dept.

July 2005 Executive Operating Officer and Division Manager of Household Product Div.

April 2007 Senior Executive Operating Officer, and President of JUKI Household Product Co., Ltd.

May 2008 Senior Executive Operating Officer, CCO, CQO, and in charge of Information System Dept.

October 2008 Chief Executive Operating Officer and Division Manager of Industrial Sewing Machines Business Div.

June 2009 Managing Director and Division Manager of Industrial Sewing Machines Business Div.

April 2011 Managing Director, “in charge of Business Operation Center (Sewing Machinery Business Unit),” Senior Executive Director of Sewing Machinery Business Unit, and General Manager of Customer Support Dept. of Sewing Machinery Business Unit

March 2012 Senior Managing Director, “in charge of Business Operation Center (Sewing Machinery Business Unit),” and Senior Executive Director of Sewing Machinery Business Unit

February 2013 Representative Senior Managing Director, “in charge of Business Operation Center (Sewing Machinery Business Unit),” and “in charge of Business Development Center”

(To the present)

3 Shinji Yamaguchi (September 19, 1948)

68,000 shares

43




Company heldApril 1978 Joined the Company February 2000 General Manager of Business Renovation

Promotion Dept. April 2002 Deputy HQ Manager of Administration HQ

of Electronic Assembly and Test Systems Div.

January 2004 Executive Operating Officer and Deputy Division Manager of Electronic Assembly and Test Systems Div.

March 2005 Executive Operating Officer and Division Manager of Electronic Assembly and Test Systems Div.

June 2005 Director and Division Manager of Electronic Assembly and Test Systems Div.

June 2006 Managing Director and Division Manager of Electronic Assembly and Test Systems Div.

April 2011 Managing Director, “in charge of Business Operation Center (Electronic Assembly Systems Business Unit),” “in charge of Quality Assurance Dept.,” and Senior Executive Director of Electronic Assembly Systems Business Unit

4 Hirokazu Nagashima (February 1, 1958)

(To the present)

74,000 shares

April 1974 Joined the Company April 2003 Executive Operating Officer, CPO, and HQ

Manager of Production HQ of Industrial Sewing Machines Business Div.

June 2006 Director, CPO, and HQ Manager of Production HQ

June 2009 Executive Operating Officer, CPO, CQO, and General Manager of Production Planning Dept.

October 2009 Executive Operating Officer and Deputy HQ Manager of Production HQ of Industrial Sewing Machines Business Div.

March 2011 Executive Operating Officer and General Manager of Technology Control Dept. of Technology HQ

July 2011 Senior Executive Operating Officer, “in charge of Development Center”

March 2012 Managing Director, “in charge of Development Center”

(To the present)

5 Takashi Mizuno (February 2, 1951)

59,000 shares

44




Company heldApril 1969 Joined Teikoku Piston Ring Co., Ltd.

(currently TPR Co., Ltd.) February 1996 Deputy General Manager of Overseas

Business Dept., ditto October 1998 General Manager of Trade Dept., ditto June 2002 Director, ditto (President of United Piston

Ring Inc.) June 2005 Corporate Officer, ditto, and President of

United Piston Ring Inc. February 2006 Corporate Officer, ditto, and President of

TEIPI Corporation of America June 2006 Managing Officer, ditto, and President of

TEIPI Corporation of America June 2007 Managing Officer and General Manager of

Overseas Business Dept., ditto, and Director of TEIPI Sales Co., Ltd. (currently TPR Trading Co., Ltd.)

June 2009 Managing Director, ditto, and Director of TEIPI Sales Co., Ltd.

June 2010 Senior Managing Director, ditto, Director of TEIPI Sales Co., Ltd., and Director of the Company

6 Toshihiko Ozaki (January 31, 1947)

June 2011 Director and Senior Managing Officer, ditto, Director of TPR Trading Co., Ltd., and Director of the Company (To the present)

0 shares

(Notes) 1. There are no conflicts of interest between the Company and any of the above candidates for Directors. 2. Mr. Toshihiko Ozaki is a candidate for Outside Director. 3. Mr. Toshihiko Ozaki is nominated as a candidate for Outside Director because we expect him to serve as a

competent Outside Director and to appropriately provide advice and make decisions from an objective and neutral position based on his broad experience and knowledge as a corporate manager and his considerable insight and supervisory abilities with regard to corporate management.

4. Mr. Toshihiko Ozaki, currently an Outside Director of the Company, will have been in office for two years and nine months at the conclusion of this General Meeting of Shareholders.

5. Upon the approval of Mr. Toshihiko Ozaki’s election in this proposed resolution, the Company will conclude a “Contract for Limitation of Liability” with him for the purpose of limiting his such liability, as provided for in Paragraph 1 of Article 423 of the Companies Act, in accordance with Article 32 of the Company’s Articles of Incorporation. The maximum amount of liability under said contract is the amount provided by laws and regulations.

6. Mr. Toshihiko Ozaki is such independent director as specified by the Tokyo Stock Exchange.

45

Third proposal: Election of 2 Substitute Audit & Supervisory Board Members

The resolution by the General Meeting of Shareholders on the election of substitute Audit & Supervisory Board Members, Mr. Yasuaki Isobe and Mr. Yutaka Hori, shall remain in effect until the start of this General Meeting of Shareholders. Accordingly, in order to prepare for a case in which the number of Audit & Supervisory Board Members falls short of the number stipulated by laws and regulations, the election of 2 substitute Audit & Supervisory Board Members is proposed.

The Audit & Supervisory Board consented to the proposal of this resolution. The candidates for substitute Audit & Supervisory Board Members are as follows:

No. Name (Date of birth) Career summary, positions, and significant concurrent positions


Company heldJuly 1969 Joined Fuji Bank Limited (currently Mizuho

Bank, Ltd.) May 1993 Accounting General Manager of Corporate

Planning Div., ditto May 1996 General Manager of Bakurocho Branch, ditto March 2001 Managing Director of The Chiba Kogyo

Bank, Ltd. June 2002 Senior Executive Operating Officer of Fuji

Research Institute Corporation (currently Mizuho Research Institute Ltd.)

June 2005 Standing Audit & Supervisory Board Member of Mizuho Staff Co., Ltd.

June 2006 Standing Audit & Supervisory Board Member of Nihon Shurui Hanbai Co., Ltd.

1 Yasuaki Isobe (May 6, 1946)

June 2009 Retired as Standing Audit & Supervisory Board Member, ditto

0 shares

April 1979 Registered as an attorney (Dai-ichi Tokyo Bar Association)

December 1989 Representative attorney of Hori & Associates Law Office (currently Hori & Partners)

2 Yutaka Hori (October 5, 1949)

(To the present)

0 shares

(Notes) 1. There are no conflicts of interest between the Company and any of the above candidates for substitute Audit

& Supervisory Board Members. 2. The candidates are substitutes for Outside Audit & Supervisory Board Members and Audit & Supervisory

Board Members other than Outside Audit & Supervisory Board Members. 3. Mr. Yasuaki Isobe is nominated as a candidate for substitute for Outside Audit & Supervisory Board

Member and Audit & Supervisory Board Member other than Outside Audit & Supervisory Board Member because he is expected to appropriately provide advice and conduct audits based on his broad experience as a corporate manager and extensive insight.

4. Mr. Yutaka Hori is nominated as a candidate for substitute for Outside Audit & Supervisory Board Member and Audit & Supervisory Board Member other than Outside Audit & Supervisory Board Member because he is expected to appropriately provide advice and conduct audits on matters such as compliance based on the legal expertise and experience he has built up as an attorney over many years.

5. In the event of the election of Mr. Yasuaki Isobe and Mr. Yutaka Hori as substitute Audit & Supervisory Board Members, Mr. Yasuaki Isobe shall take first priority and Mr. Yutaka Hori shall take second priority.

6. Upon assumption of office as Outside Audit & Supervisory Board Members, the Company will conclude “Contracts for Limitation of Liability” with Mr. Yasuaki Isobe and Mr. Yutaka Hori for the purpose of limiting their such liability, as provided for in Paragraph 1 of Article 423 of the Companies Act, in accordance with Article 44 of the Company’s Articles of Incorporation. The maximum amount of liability under said contract is the amount provided by laws and regulations.

7. The Company may cancel the election of substitute Audit & Supervisory Board Members before they assume office as Audit & Supervisory Board Members. The cancellation shall be resolved by a majority of the Board of Directors and shall require the consent of the Audit & Supervisory Board.